In a significant stride towards standardized global sustainability reporting, the Greenhouse Gas Protocol (GHG Protocol) and the International Sustainability Standards Board’s IFRS S2 Climate-related Disclosures Standard have aligned, signalling a transformative period for corporate reporting on greenhouse gas emissions. This alignment is set to have profound implications for Australian businesses across various spectrums: those mandated to complete climate risk disclosures, businesses whose clientele are required to complete these disclosures, and organisations aiming for carbon neutrality.

The GHG Protocol, established in 1998 by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), has been the cornerstone of GHG accounting standards globally. Its Corporate Standard, revised last in 2004, along with the Corporate Value Chain (Scope 3) Standard of 2011, has provided a comprehensive framework for corporations to measure and report their emissions. With the ISSB’s IFRS S2 standard mandating the measurement of GHG emissions according to the GHG Protocol, a streamlined path has emerged for companies already committed to the protocol’s comprehensive emissions accounting standards.

Alignments and Differences Between GHG Protocol and IFRS S2

GHG Protocol vs IFRS S2

GHG Protocol vs IFRS S2

For Companies Required to Complete Mandatory Climate Risk Disclosures: The integration of the GHG Protocol into the IFRS S2 standard underscores an expanding regulatory landscape, where Australian businesses, councils, and government entities are prompted to adopt a unified approach to emissions reporting. This move not only facilitates compliance with emerging global standards but equally positions these companies advantageously in international markets, where consistency and transparency in sustainability reporting are increasingly valued by investors and stakeholders.

According to the Greenhouse Gas Protocol Website, IFRS S2 is currently being adopted into regulatory frameworks, including in Turkey, Nigeria, Sri Lanka, Brazil and Costa Rica. Other governments have expressed intention to make IFRS S2 mandatory, including in Canada, the UK, Japan and Singapore, among others. It is expected that IFRS S2 will continue to be adopted by jurisdictional authorities around the world as GHG emission disclosure becomes common practice to meet investor needs.

For Businesses Whose Customers Must Complete Mandatory Climate Risk Disclosures: Companies in this category should anticipate and respond to the evolving expectations around sustainability practices, including the availability of data to inform customer’s Scope 3 emission inventories. By aligning their GHG accounting and reporting practices with the GHG Protocol, businesses can assure their clients of their commitment to recognised standards, thereby supporting their clients’ compliance efforts and fostering a culture of transparency and accountability in the supply chain.

For Businesses Pursuing Carbon Neutrality: The harmonisation of GHG reporting standards presents an opportunity for businesses aiming for carbon neutrality to benchmark their progress against a globally recognised framework. By leveraging the GHG Protocol and aligning with IFRS S2 requirements, companies can validate their emission reduction strategies, engage stakeholders with credible and reliable reporting, and demonstrate sustainability leadership in the international marketplace.

Looking Ahead
The collaboration between the GHG Protocol and the ISSB in pioneering a common global standard for GHG accounting and reporting reflects a commitment to transparency, consistency, and credibility in corporate sustainability endeavours. As Australian companies navigate this evolving landscape, the integration of these standards offers a roadmap to not only comply with regulatory mandates but also to advance their sustainability objectives. The GHG Protocol and IFRS S2 serve as critical tools in this journey, enabling businesses to measure, manage and mitigate their environmental impact effectively, and contribute to a more sustainable future.

This transformation in corporate GHG reporting heralds a new era of sustainability disclosure, compelling Australian businesses to adapt, innovate, and lead in the global transition towards a sustainable and resilient economy.